BaFin Implements Macro-Prudential Measures and Remuneration Ordinance
As part of recent regulatory developments, the Federal Financial Supervisory Authority of Germany (BaFin) announced that the revised "Solvency Regulation (SolvV)" came into force on September 25, 2021. One of the changes involves the addition of a new Section 36a in the Solvency Regulation to provide the legal basis for calculating the capital buffer for systemic risks. BaFin also noted that the "Institute Remuneration Ordinance (InstitutsVergV)," which came into force on September 25, 2021, implements the fifth Capital Requirements Directive (CRD5). Finally, BaFin issued an order pursuant to Section 48 (7) of the German Banking Act (KWG), which recognizes Luxembourg's loan-to-value limit for private residential property financing.
The BaFin order implements a recommendation that the European Systemic Risk Board (ESRB) published on June 11, 2021. The General Board of the ESRB decided to include a macro-prudential measure for loan-to-value (LTV) limits on the new mortgage loans in the residential real estate in Luxembourg to the list of macro-prudential policy measures that are recommended for reciprocation. The ESRB recommendation specified the legally binding LTV limits for new mortgage loans on residential real estate located in Luxembourg, with different LTV limits applicable to different categories of borrowers:
- LTV limit of 100% for first-time buyers acquiring their primary residence.
- LTV limit of 90% for other buyers (that is non first-time buyers) acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15% of the portfolio of new mortgages granted to these borrowers with an LTV above 90% but below the maximum LTV of 100%.
- LTV limit of 80% for other mortgage loans (including the buy-to-let segment).
Related Links (in German)
- News on Solvency Regulation
- News on Remuneration Ordinance
- News on LTV Measure
- Order on LTV Measure
- ESRB Recommendation, June 2021 (in English)
Keywords: Europe, Germany, Banking, CRD5, Basel, Remuneration, Solvency Regulation, Luxembourg, Systemic Risk, Macro-Prudential Policy, Regulatory Capital, Residential Real Estate, Credit Risk, LTV, RRE, Bafin, ESRB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
BSP Issues Multiple Updates for Financial Institutions in March 2022Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
